Price Discrimination in Retail Markets
نویسندگان
چکیده
The hypothesis that price discrimination exploiting the consumer's willingness to pay for quality can occur in multi-firm industries is confirmed using microdata on retail gasoline prices. A test based on the price differentials at stations providing only one service quality (full or self service) and stations providing both qualities is developed and implemented with controls for variations in outlet, brand and local market characteristics. The data suggest that price discrimination at the retail level adds at least ten cents per gallon on average to the price of full-service gasoline.
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